FY 2017 Results presentation

12 May 2016
2819February,
September, 2017
2018
1
Disclaimer
This presentation (the "Presentation") has been prepared and is issued by, and is the sole responsibility of Telepizza Group, S.A. (“Telepizza" or "the Company"). For the purposes hereof, the Presentation shall
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The information contained in the Presentation has not been independently verified and some of the information is in summary form. No representation or warranty, express or implied, is made by the Company
or its affiliates, nor by their directors, officers, employees, representatives or agents as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions
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Telepizza cautions that this Presentation contains forward looking statements with respect to the business, financial condition, results of operations, strategy, plans and objectives of the Company. The words
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be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not
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The information contained in the Presentation, including but not limited to forward-looking statements, is provided as of the date hereof and is not intended to give any assurances as to future results. No person
is under any obligation to update, complete, revise or keep current the information contained in the Presentation, whether as a result of new information, future events or results or otherwise. The information
contained in the Presentation may be subject to change without notice and must not be relied upon for any purpose.
This Presentation contains financial information derived from Telepizza’s audited consolidated financial statements for the twelve-month periods ended December 31 2016, 2015 and 2014. In addition, the
Presentation contains Telepizza’s unaudited quarterly financial information for 2014, 2015, 2016 and 2017 prepared according to internal Telepizza’s criteria. Financial information by business segments is
prepared according to internal Telepizza’s criteria as a result of which each segment reflects the true nature of its business. These criteria do not follow any particular regulation and can include internal
estimates and subjective valuations which could be subject to substantial change should a different methodology be applied.
In addition, the Presentation contains certain annual and quarterly alternative performance measures which have not been prepared in accordance with International Financial Reporting Standards, as adopted
by the European Union, nor in accordance with any accounting standards, such as “chain sales”, “like-for-like chain sales growth”, “underlying EBITDA” and “digital sales”. These measures have not been
audited or reviewed by our auditors nor by independent experts, should not be considered in isolation, do not represent our revenues, margins, results of operations or cash flows for the periods indicated and
should not be regarded as alternatives to revenues, cash flows or net income as indicators of operational performance or liquidity.
Market and competitive position data in the Presentation have generally been obtained from industry publications and surveys or studies conducted by third-party sources. There are limitations with respect to
the availability, accuracy, completeness and comparability of such data. Telepizza has not independently verified such data and can provide no assurance of its accuracy or completeness. Certain statements in
the Presentation regarding the market and competitive position data are based on the internal analyses of Telepizza, which involve certain assumptions and estimates. These internal analyses have not been
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competitive position data contained in the Presentation.
You may wish to seek independent and professional advice and conduct your own independent investigation and analysis of the information contained in this Presentation and of the business, operations,
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2
FY 2017 highlights

1 +8.6% chain sales growth, +5.5% EBITDA1 growth and 0.38€ EPS2; above guidance

2 Chain sales +5.8% in Spain, good recovery in non-delivery due to refurbishments and commercial policy

3 Record year in Core International, chain sales +13.9%3

4 Acquisition of leading pizza player in Ireland, Apache Pizza; stores in 5 new geographies in 2017

5 Record net new stores: +218 (+16% y-o-y), over 1,600 stores reached in 2017

5 Proposed payment of 2017 dividend: 20% payout (€6.4m)

Notes:
1. Underlying EBITDA adjusted by €0,7 million of extraordinary costs
2. Based on cash taxes and before PPA amortization charges
3. Constant currency, excluding Master Franchises

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FY 2017 performance vs guidance
Guidance (as of Q3 results presentation) FY actual

Spain total chain sales growth: 5% to 6% 5.8%

Core International total chain sales growth1: 12% to 14% 13.9%

Underlying EBITDA: €65 million to €67 million €67.2m

Net new stores in Core Geographies: 70 to 80 204

Capex: c.€30 million (excluding larger acquisitions) €27.8m2

Cash EPS(A)3: €0.32 to €0.35 per share €0.38

Initiation of a dividend for year-end 2017, with payout ratio in the 15% to 20% range 20%

Notes:
1. Constant currency, excluding Master Franchises
2. Excluding €6.7m acquisition of Aparche Pizza
3. Based on cash taxes and before PPA amortization charges

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Solid chain sales growth in 2017 in Spain and International
Record growth in Core International, EBITDA growth above guidance
€m (unless otherwise stated) FY 2017 FY 2016 % change

Group chain sales 561.6 517.0 8.6%

Core Geographies1 chain sales 529.3 486.9 8.7%

Core Geographies1 constant currency sales growth (%) 8.3%

Core Geographies1 LFL sales growth (%) 4.1%

Spain chain sales 354.7 335.2 5.8%

LfL sales growth (%) 3.6%

International chain sales 206.9 181.8 13.8%

Core International1 chain sales 174.6 151.7 15.1%

Core International1 constant currency sales growth (%) 13.9%

Core International1 LFL sales growth (%) 5.2%

Revenues 361.0 339.6 6.3%

Constant currency revenue growth (%) 5.9%

Group Underlying EBITDA2 67.2 63.6 5.5%

Notes:
1. Excluding Master Franchises
2. FY 2016 adjusted for €32 million of IPO related costs, FY 2017 adjusted by €0.7 million of corporate deal extraordinary costs

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Q4 LFL performance: 2-year view
Spain and Core International LFL impacted in Q4 by high PY comparables, additional impact in
Spain due to negative calendar effect
Spain 2-year LFL (%) Core International1 2-year LFL (%)

2017 year calendar impacts

-2.8% 1.1% 0.5% -0.8% 15.5%

13.7%
13.2%
9.3%
11.4%
8.2% 4.3% 3.1%

6.7% 6.9% Base

6.5% 2016
5.3% Base
0.7% 2016
1.4% 7.1% Base
2016
Base Base
2016 2016
Base
5.9% 2016

Base
2016

Base
2016

Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2017 Q2 2017 Q3 2017 Q4 2017

(Base 2015) (Base 2015)

Note:
1. Excluding Master Franchises

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Actions in Non-delivery increasing growth y-o-y in Spain in 2017

Delivery vs Non-delivery sales in Spain

FY 2016 FY 2017

9.5% Impact of store refurbishments

and commercial policy

6.4%
5.8%
5.3%
4.6%

-0.4%

1Q 16 Delivery sales growth Non-delivery sales growth Total Spain growth 2Q 16

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Digital driving growth in the Delivery channel
Double digit digital sales growth in 2017, accounting for 39% of delivery sales in Spain1
Continued growth of the delivery channel in Spain

Telepizza growth by channel in FY 2017

35.3%

14.6%

5.8% 6.4%

Spain growth Delivery growth Digital delivery growth Mobile growth

Note:
1. Digital Delivery sales over Delivery sales in Spain

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 Digital in 2017

New app, in constant development

with new features Telepizza Digital sales by platform

Implementing
new features
➢ Geolocation
➢ Real time tracker
35%
➢ Payment tokenization 43%
51%
➢ Faster/easier 59%

41%
Conversion rates as of Q4 2017 37%
32%
Telepizza.Es 24.4% 26%
1st Agregator
Just-Eat.Es
Delivery Brand 17.0%
20% 24%
2nd Agregator 15% 18%
Glovoapp.Com
Delivery Brand 17.8%
2rd Delivery Pizza Dec-2014 Dec-2015 Dec-2016 Dec-2017
Dominospizza.Es
Brand 17.8%
3rd Agregator App Web responsive PC
Deliveroo.Es
Delivery Brand
11.3%

Source: PC and web responsive conversion rates: Netquest data

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Innovation in 2017

Barbacoa Meat & Grill

Carbonara Gourmet
Carnivora Gourmet
Gourmet pizzas
➢ Priced at +2€

Penetration of innovation1

+99% sales growth vs 2016

Pizza Sweet
➢ Together with

➢ Using our dough

➢ Extending dessert range

2016 2017
Note:
1. Sales including innovation over total sales

10
Core International performance
Record double digit growth in Core International, underpinned by outstanding performance in H1

Core International during FY 2017

Rest of Europe
• Portugal: Consistent double digit LFL growth

• Poland: strong LFL growth in owned stores

• Switzerland & Czech: full conversion to Telepizza brand

Latin America
• Chile: positive performance, outperforming market despite
challenging macro environment in the second half of the year

• Colombia, Peru and Ecuador: double digit growth, driven by

horizontal expansion and positive LFL growth

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Unit expansion: Over 1,600 stores reached in 2017
+218 net new stores in 2017, stores in 5 new geographies in 2017

Net new stores per region during 2017

Stores added in five

Rest of Europe new countries

147 new stores 2 store (Mar-17)

10 stores (Mar-17)
Master
Spain Franchises 6 stores (Apr-17)

33 new stores 14 new stores

7 stores (Jun-17)

133 stores (Dec-17)

218 total net new stores in 2017

Latin America Consolidated Core countries

24 new stores 1,429 stores
New Core countries

MFAs 178 stores Total: 1,607 stores

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International expansion: Ireland, with

Acquisition of Apache Pizza in Ireland, +133 stores

➢ Market leader in Ireland, doubling the

2nd player in number of stores

➢ Operating Apache brand, leader in

brand awareness

➢ 100% franchised operation, strong

pipeline of new franchisees

➢ Joint venture with OKR, controlled by

Telepizza

➢ €1.4m EBITDA in FY 20171, pre industrial

synergies

➢ €6.7m acquisition investment in 2017

and potential additional €4m in earnouts
to be paid in 2018, 7.6x multiple

Notes:
1. Fiscal year ended 30th June 2017

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Financial information
Chain sales bridge

Spain FY 2017 chain sales growth International FY 2017 chain sales growth

5.8% 15.1%
1.2% 13.8%

2.2%
8.8%

3.6% 7.3
5.2% %

LFL Horizontal Total growth LFL Horizontal FX Total growth Master Franchises Total growth
Core International International

Group FY 2017 chain sales growth

0.3% 8.6%

4.2%

4.1%

LFL Horizontal FX Total growth

15
Chain sales and Revenues
Continued growth in franchised chain sales, as the franchisee network expands

Group chain sales and Revenues (€m)

Chain sales Revenues

8.6%
562
517 32
30
6.3%
361
340

335
291 +15%
144
+16% 166

-1%
196 -1% 195
196 195

FY 2016 FY 2017 FY 2016 FY 2017

Owned stores sales Owned stores sales
Franchised sales Supply chain, royalties,
MF sales marketing & other income

16
EBITDA bridge

2017 EBITDA bridge year-on-year (€m)

18.6%
12.9
18.7%

67.2
63.6 (5.8)
(3.6)

1 1
FY 2016 EBITDA Incremental sales and revenues Gross margin contraction Incremental structure FY 2017 EBITDA

EBITDA
margin (%)

Note:
1. Underlying EBITDA, excluding €32m of IPO related costs in FY 2016 and €0.7m corporate deal extraordinary costs in FY 2017

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Income statement
€m (unless otherwise stated) FY 2017 FY 2016 % change

Total revenues 361.0 339.6 6.3%

COGS -100.0 -88.6 12.8%

Gross margin 261.0 251.0 4.0%

% of revenues 72.3% 73.9% -1.6pp

Other Opex -193.8 -187.3 3.5%

Underlying EBITDA 67.2 63.6 5.5%

% of revenues 18.6% 18.7% -0.1pp

Corporate deal extraordinary costs -0.7 - n.m.

IPO costs - -32.0 n.m.

Reported EBITDA 66.4 31.6 110.1%

Depreciation (excl. PPA amortisation) -13.4 -11.6 16.0%

Underlying EBITA 53.8 52.1 3.2%

PPA amortisation -5.5 -5.8 -4.6%

Net financial income / (expense) -8.5 -19.9 -57.3%

Exchange differences -0.9 -1.9 -52.9%

Other1 0.0 -0.7 n.m.

Income tax -6.4 19.0 n.m.

Minority interest 0.2 0.0 n.m.

Results for the period 31.8 10.7 197.8%

Note:
1. Includes impairments and losses on sale of PP&E

18
Capital expenditure

Total capex in 2016 and 2017 (€m)

Total €34.5m

Apache
6.7
acquisition in 2017

27.0 27.8

6.9
7.6

1.6

Refurbishment plan 4.2

finalized in 2017 7.9
3.9

3.8 4.3
2.2
2.4
5.4 4.6

FY 2016 FY 2017

Refurbishments and
Maintenance
relocations
Efficiency and supply chain
Store buybacks
Digital & IT1
Store openings

Note:
1. Including IT-related maintenance capex

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Cash Flow bridge

2017 Cash Flow bridge year-on-year (€m)

66.4
4.0
Underlying EBITDA
€67.2m

(34.5)
(7.5)
(5.2) (113.6)

(137.0)

Net debt as of FY 2017 EBITDA 1 Change in working Capex Cash interest Cash tax Net debt as of
31st December 2016 capital and other 31st December 2017
impacts

Note:
1. The reported EBITDA figure of €66.4m is being used in the Cash Flow bridge calculation

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Net debt and leverage
Deleveraging on track, under 2x in 2017
Leverage ratio1 as of 31th December: 1.7x

Leverage
FY 2016: 2.2x

200.9 113.6
Leverage
FY 2017: 1.7x

87.3
67.2

2
Gross debt Cash position Net debt FY 2017 Underlying EBITDA

Notes:
1. Measured as Net Debt / Underlying EBITDA
2. Net debt measured as gross debt – cash position

21
FY 2018 outlook

Spain total chain sales growth: 4% to 5%

Core International total chain sales growth: double digit

Underlying EBITDA growth: Low to mid-single digit

Net new stores in Core Geographies: 60 to 70

Capex: c.€25 million (excluding larger acquisitions)

Cash EPS(A)1: c.€0.40 per share

Dividend for year-end 2018, with payout ratio in the 15% to 20% range

Note:
1. Based on cash taxes and before PPA amortization charges

22
Q&A
Appendix
Store Count
2017 2016 2015
Franchised Franchised Franchised
Number of Stores Own stores Total stores Own stores Total stores Own stores Total stores
stores stores stores

Core Geographies 441 988 1,429 454 771 1,225 461 693 1,154

Spain1 137 571 708 164 511 675 183 461 644

Core International 304 417 721 290 260 550 278 232 510

Rest of Europe 91 296 387 73 167 240 73 153 226

Portugal 43 73 116 41 68 109 44 61 105
Poland 38 81 119 32 88 120 29 92 121
Switzerland 0 9 9 0 11 11 0 0 0
Czech Republic 10 0 10 0 0 0 0 0 0
Ireland 0 133 133 0 0 0 0 0 0

Latin America 213 121 334 217 93 310 205 79 284

Chile 92 68 160 91 52 143 89 49 138
Colombia 45 45 90 61 34 95 64 27 91
Peru 45 4 49 43 4 47 35 1 36
Ecuador 23 4 27 20 3 23 17 2 19
Panama 6 0 6 2 0 2 0 0 0
Paraguay 2 0 2 0 0 0 0 0 0

Master Franchises 0 178 178 0 164 164 0 157 157

Guatemala 0 93 93 0 88 88 0 83 83
El Salvador 0 48 48 0 49 49 0 47 47
Russia 0 14 14 0 13 13 0 14 14
Bolivia 0 7 7 0 5 5 0 4 4
Iran 0 7 7 0 0 0 0 0 0
Angola 0 5 5 0 5 5 0 5 5
UK 0 2 2 0 0 0 0 0 0
Saudi Arabia 0 2 2 0 4 4 0 0 0
Others 0 0 0 0 0 0 0 4 4

Total Group 441 1,166 1,607 454 935 1,389 461 850 1,311
Notes:
1. Includes stores in Morocco and France.

25
Unit expansion

Core Geographies1 network development Franchised vs owned mix y-o-y

1,429

1,225 FY 2016 FY 2017

By number of stores
1,154 721 27%
33%
550

510
67%
73%

708
675
644

FY 2016 FY 2017
Dec-15 Dec-16 Dec-17
2
Spain Core International

By chain sales
38% 35%

Master Franchised store network 62%

65%

15 openings 21 openings 178

157 (6 closures)
164 (7 closures)

Dec-15 Dec-16 Dec-17

Notes:
1. Excluding Master Franchises,
2. Includes stores in Morocco and France.

26
Chain sales growth

Spain sales growth Core International1 sales growth

14.4%
13.5%

11.7%
7.8% 10.9%
9.8%
6.3%
5.4% 5.3%
5.1%

4.0% 5.7%

H1 15 H2 15 H1 16 H2 16 H1 17 H2 17 H1 15 H2 15 H1 16 H2 16 H1 17 H2 17

Chain sales growth Chain sales growth

Note:
1. Constant currency, excluding Master Franchises

27
Underlying EBITDA
Underlying EBITDA growth above guidance, impacted by gross margin pressure

Underlying EBITDA growth (€m) Operating costs (€m)

6.5%
18.7% 18.6%
294
5.5% 276

67.2
63.6 +4% 99
95

+3% 95
92

+13% 100
89

FY 2016 FY 20171 FY 2016 FY 2017

COGS Personnel expenses Other costs

EBITDA margin

Note:
1. FY 2016 adjusted for €32 million of IPO related costs, FY 2017 adjusted by €0,7 million of extraordinary costs

28
Balance sheet
€m (unless otherwise stated) 31st December 2017 31st December 2016 31st December 2017 31st December 2016

Non current assets 835.8 826.4 Equity 635.4 607.1

Property, plant and equipment 50.5 46.0 Non-current liabilities 290.2 285.0

Goodwill 392.5 387.3 Borrowings 196.7 195.6

Other intangible assets 326.9 330.2 Other non-current liabilities 93.5 89.4

Other non-current assets 65.9 62.8

Current assets 145.3 119.9 Current liabilities 55.5 54.2

Subtotal current assets 145.3 119.6 Trade and other payables 51.7 50.2
Other current liabilities 3.8 3.9

Inventories 10.9 11.6

Receivables and other current assets 47.1 44.0

Cash and cash equivalents 87.3 64.0

Assets classified as discontinued Liabilities classified as

0.1 0.3 0.1 0.1
operations discontinued operations

Total assets 981.2 946.3 Total equity and liabilities 981.2 946.3

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Glossary

 Chain sales: Chain sales are own store sales plus franchised and master franchised store sales as reported to us by the franchisees and
master franchisees

 LfL chain sales growth: LfL chain sales growth is chain sales growth after adjustment for the effects of changes in scope and the effects of
changes in the euro exchange rate as explained below

– Scope adjustment. If a store has been open for the full month, we consider that an “operating month” for the store in question; if not, that
month is not an “operating month” for that store. LfL chain sales growth takes into account only variation in a store’s sales for a given
month if that month was an “operating month” for the store in both of the periods being compared. The scope adjustment is the
percentage variation between two periods resulting from dividing (i) the variation between the chain sales excluded in each of such
periods (“excluded chain sales”) because they were obtained in operating months that were not operating months in the comparable
period, by (ii) the prior period’s chain sales as adjusted to deduct the excluded chain sales of such period (the “adjusted chain sales”). In
this way, we can see the actual changes in chain sales between operating stores, removing the impact of changes between the periods
that are due to store openings and closures; and

– Euro exchange rate adjustment. We calculate LfL chain sales growth on a constant currency basis in order to remove the impact of
changes between the euro and the currencies in certain countries where the Group operates. To make this adjustment, we apply the
monthly average euro exchange rate of the operating month in the most recent period to the comparable operating month of the prior
period

 EBITDA: EBITDA is operating profit plus asset depreciation and amortization

 Underlying EBITDA: Underlying EBITDA is EBITDA excluding IPO related costs in FY2016 and the extraordinary corporate deal costs in
FY2017.

 Digital delivery chain sales: Digital delivery chain sales are the delivery chain sales made through digital channels (PC, web responsive
and Telepizza application), expressed in percentage terms. Digital delivery chain sales (both own and franchised) are recorded automatically
in the Company’s SAGA store information system when the online order is placed by the customer

30